Health Economics and Financing

Course Type	Course Code	No. Of Credits
Discipline Core	SPG2PH409	4

Course Coordinator and Team: Samik Chowdhury

Email of course coordinator: samik@aud.ac.in

Pre-requisites: None

Aim: The course offers a distinct lens to study public health, health care and health policy. Drawing on the theoretical foundations and empirical evidence from select branches of economics viz. microeconomics, macroeconomics, development economics, public economics, behavioural economics and economics of information, the course aims to develop an objective yet humane and contextual understanding of the health sector.

Course Outcomes:

Apply core microeconomic concepts to health and health care
Understand the limitations of the market in resource allocation for public health and health care
Appreciate the macroeconomic associations between health and economic development
Understand and perform basic economic evaluation in health
Develop a clear understanding of the health financing landscape in India.

Brief description of modules/ Main modules:

Module 1: Markets, Government and Health

This introductory module begins with how economists think about the world in terms of key concepts like scarcity, trade-off, opportunity cost, marginalism, efficiency, preference, indifference, utility, elasticity, production possibility frontier. A brief revision of reading and interpreting graphs is also a part of this module. It then moves on to providing a basic understanding of how constituent units of an economy work and interact via markets. The second part of the module provides a brief introduction to key macroeconomic concepts like comparative advantage, economic growth, inflation and unemployment. The third part of the module presents the limitations of the market and the role of Government. Here the concepts of externality, asymmetric information, market failure and public goods will be discussed. The context against which these concepts will be illustrated is the health sector

Module 2: Demand for Health and Health Care

This module introduces the seemingly elegant conceptualisation of health as a commodity that can be produced, consumed, and invested on while simultaneously uncovering the inherent shortcomings of market economics (asymmetric information, adverse selection and moral hazard) in explaining the distinctive complexities of health and health care. The idea is to lead students towards the conceptualisation of public health as a public (merit) good with inherent externality issues and the consequent significance of public provisioning.

Module 3: Economic Evaluation in Health

This module will introduce the concept and measurement of disease burden and a attempt a theoretical understanding of economic evaluation of health care programmes and their implications in a resource poor setting. The key concepts that will be discussed in this module includes DALY, QALY, cost-benefit analysis, cost-utility analysis, cost-effectiveness analysis, cost of illness and health technology assessment.

Module 4: Health financing

This module may be classified into three sections. Section one introduces students to the framework of health financing and then presents health financing mechanisms like tax-based public spending, social insurance, Government sponsored health insurance, private insurance, out of pocket spending etc. against this framework. Section two engage further with these mechanisms as means to differentiate between health systems around the world. Distinct health systems like that of the UK, USA, Thailand, Germany, Costa Rica, Cuba etc. will be taken up to highlight the role of health financing in determining health system characteristics. Section three will attempt a critical understanding of the features and consequences of the current health financing arrangements in India.

Module 4: Macroeconomics of health

This module covers the linkages between health and the macroeconomy. The intrinsic and instrumental role of health on human development and economic growth, both across and within nations forms an integral part of this module. Students will also be introduced to the rich body of work on disease and development. In addition, this module will also engage with the political economic aspects of selected special topics like health equity, pharmaceutical pricing, demography and health, fiscal federalism and others.

Assessment Details with weights:

MCQ Quizzes (20%).
Term paper and presentation (40%).
Written examination (40%).

Reading List:

Microeconomic Tools for Health Economics (Chapter 2) from The Economics of Health and Health Care, Sherman Folland, Allen C. Goodman, Miron Stano, Pearson.
McPake, B. & Normand, C. Health Economics: An International Perspective, Routledge (Chapters 1 to 8)
Principles of Economics, N. Gregory Mankiw (selected chapters), Cengage.
Arrow, K. (1963) “Uncertainty and the Welfare Economics of Medical Care.'' American Economic Review, 53, pp. 941-973
Akerlof, George “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 84, 1970, 488—500.
Grossman, M (1972) “On the Concept of Health Capital and the Demand for Health,” Journal of Political Economy, 80(2), 223-255.
Drummond, M. F., Sculpher, M. J., Claxton, K., Stoddart, G. L., and Torrance, G. W., “Methods for the Economic Evaluation of Health Care Programmes”, OUP
Le Grand, J., 1978, The Distribution of Public Expenditure: The Case of Health Care, Economica 45, 125-142.
Smith J. Healthy bodies and thick wallets: the dual relation between health and economic status. J Econ Perspectives 1999 Spring;13(2):145–66.
National Health Accounts, Government of India. https://nhsrcindia.org/national-health-accounts-records
Health Financing and Financial Protection, Chapter 1 , High Level Expert Group (HLEG) Report on Universal Health Coverage, GOI, 2011
Kumar, A. K., Chen, L. C., Choudhury, M., Ganju, S., Mahajan, V., Sinha, A., & Sen, A. (2011). Financing health care for all: challenges and opportunities. Lancet (London, England), 377(9766), 668–679. https://doi.org/10.1016/S0140-6736(10)61884-3
Selvaraj, S., Karan, A. (2012). Why publicly-financed health insurance schemes are ineffective in providing financial risk protection. Economic & Political Weekly, 47(11), 17 March.
Ghosh, S. (2011). Catastrophic Payments and Impoverishment due to Out-of-Pocket Health Spending. Economic and Political Weekly, Vol. 46, No. 47, pp. 63-70.
Bloom, David E. and David Canning, “The Health and Wealth of Nations,” Science, 2000, 287(5456), 1207-1208.
World Health Organization. Macroeconomics and health: investing in health for economic development. Report of the commission on macroeconomics and health. Geneva: WHO; 2001.
Kremer, Michael, “Pharmaceuticals and the Developing World,” Journal of Economic Perspectives, 16(4): 67–90, 2002.
Cutler, David, Angus Deaton, and Adriana Lleras-Muney, “The Determinants of Mortality,” Journal of Economic Perspectives, 2006, 20(3), 97-120.
Sen, A. (1998). Mortality as an indicator of economic success and failure. The economic journal, 108(446), 1-25.
Acemoglu, D., Johnson, S., & Robinson, J. (2003). Disease and development in historical perspective. Journal of the European Economic Association, 1(2-3), 397-405.
Sen, A. (1999). Economics and health. The Lancet, 354, SIV20.
Preston, S. H. (2007). The changing relation between mortality and level of economic development. International journal of epidemiology, 36(3), 484-490.
Grundy, Emily and Murphy, Michael J. (2015) Demography and public health. In: Oxford Textbook of Global Public Health. Oxford textbooks, 6th ed., Oxford University Press, Oxford, UK, pp. 718-735. ISBN 978019966176